Given that performance leadership by U.S. or international equities typically runs in cycles, we believe another period of outperformance by international stocks is inevitable. Yet, many U.S. investors’ portfolios still reflect a bias toward domestic equities, a bias that has been reinforced in recent years by the longest stretch of U.S. equities outperforming international equities in history. As a result, many U.S. investors are underweight international equities.
Recent performance suggests that the shift back to international equities leadership may have already begun. Although it is too soon to tell whether that shift has in fact taken place, it is clear that a lack of exposure to international equities can be costly. Now might be a great time for U.S. investors to evaluate their international exposure.
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Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. Emerging and developing market investments may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues. Investments in securities of growth companies may be volatile. Mid-sized company stock is typically more volatile than that of larger company stock. It may take a substantial period of time to realize a gain on an investment in a mid-sized company, if any gain is realized at all. Diversification does not guarantee profit or protect against loss.
These views represent the opinions of the portfolio manager at OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.